2025 COUNCIL STUDY ISSUE
NUMBER
Title
CDD 25-02 Identify Opportunities for Allowing Neighborhood-Serving Commercial Uses in Residential Zoning Districts
BACKGROUND
|
Lead Department: |
Community Development Department |
|
Support Departments: |
Department of Public Works |
|
|
Office of the City Attorney |
|
Sponsor(s): |
Planning Commission |
|
History: |
New Study Issue |
|
Council Strategic Priority: |
Yes |
|
(At time of sponsorship) |
Ability of Infrastructure to Support Development and Traffic |
|
|
Accelerating Climate Action, the Active Transportation Plan and Vision Zero Plan |
|
|
Equity, Access and Inclusion |
|
|
|
SCOPE OF THE STUDY
What precipitated this study?
The City has a number of policies to encourage retail and commercial uses and facilitate business expansion within commercially-zoned areas. In residential zoning districts, the City’s Home Occupation standards in Section 19.42.010 of the Sunnyvale Municipal Code allow a limited range of commercial uses with regulations to maintain the primary residential character of the home. In general, home-based businesses must be confined indoors within the living space of the home and any customer visits are limited to a one-on-one appointment basis. Aside from the Home Occupation standards, family day care homes are permitted by right in residential zoning districts. Other types of commercial uses in residential zoning districts require discretionary permits at public hearings, such as medical offices, community-serving places of assembly and preschools. Retail, if incidental to other permitted uses and combined with the residential use may be considered with a discretionary permit only in the R-3, R-4, R-5, and R-MH zoning districts.
Recent state laws have also cleared the way for commercially-zoned properties to redevelop to residential uses in the state’s effort to address the housing crisis. The Housing Crisis Act of 2019 (SB 330) allows cities to prohibit commercial uses on land zoned for residential uses. Some recent residential projects in Sunnyvale have also used the objective development standard provisions of SB 330 to build on Village Center sites, often existing shopping centers, prior to adoption of a master plan. The Affordable Housing and High Road Jobs Act of 2022 (AB 2011) provides for streamlined ministerial approval for certain multifamily housing development projects in commercial zones. AB 2243, approved by Governor Newsom in 2024, updates AB 2011 by easing applicability requirements and allowing regional malls to convert to housing. The Middle Class Housing Act of 2022 (SB 6) allows for residential development on property zoned for retail, parking, and office space without the requirement of rezoning the property.
Former Planning Commissioner Howard provided a Study Issue Form to staff on June 4, 2024, to identify opportunities to allow neighborhood-serving retail in residential zoning districts. The study issue idea was subsequently agendized for discussion at the June 24, 2024, Planning Commission hearing where the commissioners supported the idea on a 7-0 vote.
The Planning Commission was supportive of the idea of neighborhood-serving commercial uses in residential areas, with one commissioner commenting that the places with the highest livability in the world locate retail close to homes or within residential areas. The commissioner also opined that businesses contend with a number of regulations and allowing more commercial uses where people live could ease the financial burden on business owners. The commissioners expressed that the idea could result in improved accessibility to services and a better quality of life. They noted the City is losing existing retail to business closures and redevelopment, and underserved areas such as North Sunnyvale do not have convenient access to retail uses. If more options were available in these areas, there could be less driving to other parts of the City for basic goods and services. Some suggestions for possible commercial uses in residential areas included food trucks, pop-up retail, and personal service uses such as beauty salons and barber shops. A commissioner shared their experience on the convenience of living next to a corner market.
What are the key elements of the study?
The study would investigate the types of commercial uses that are expected to be compatible in residential zoning districts. The study would refine the Home Occupation standards as well as the residential use tables. Staff would also develop performance standards that commercial uses would be subject to, as well as the permitting process by which they will be reviewed. The study would involve coordination with Santa Clara County Department of Environmental Health to determine the regulations appropriate for food uses. Traffic and environmental studies would be conducted to review impacts to existing roads and infrastructure. A noise study is also anticipated to provide general recommendations to minimize noise from commercial uses next to residential.
Another key component of the study would be to ensure no net loss of residential units, as required by SB 330. There would also be careful review of the Housing Element to ensure there are no conflicts with the sites included in the housing inventory.
Staff does not provide a recommendation on the merit of the study issue at this time per the Study Issue Policy. Sponsored study issues would be considered by the City Council for ranking at the February 13, 2025, Study Issues/Budget Proposals Workshop.
Estimated years to complete study: 1-2 years
FISCAL IMPACT
Cost to Conduct Study
|
Level of staff effort required (opportunity cost): |
Moderate |
|
Funding Required for Non-Budgeted Costs: |
$250,000 |
|
|
Will seek budget supplement - General Fund |
Staff would hire economic, planning, and environmental consultants to study the impacts of expanding the range of commercial uses within residential districts, as the study would be a major work effort. The consultants would review the types of feasible commercial uses, develop regulations to ensure compatibility with residential uses, assist in public outreach and ordinance updates, and complete California Environmental Quality Act (CEQA) studies.
Cost to Implement Study Results
Minimal or no cost expected to implement. Any required improvements resulting from a commercial proposal within a residential zoning district would be the responsibility of the developer.
EXPECTED CITY COUNCIL, BOARD OR COMMISSION PARTICIPATION
Council-Approved Work Plan: Yes
Council Study Session: Yes
Reviewed by Boards/Commissions: Planning Commission, Sustainability Commission
RECOMMENDATION
Recommendation
Vote whether to sponsor the study issue from the Proposed Study Issues list.